Future Years Defense Program

Since its bottom-up review in 1993, the Pentagon has repeatedly indicated that it must reduce infrastructure to help pay for weapon systems modernization. However, in its Future Years Defense Programs (FYDP) for fiscal years 1996 and 1997, the Defense Department (DOD) continued to allocate about the same percentage of its budget for infrastructure as it did at the time of the bottom-up review. In addition, GAO found that planned weapon systems increases had repeatedly been shifted further into the future with each succeeding FYDP. This report compares DOD's fiscal year 1998 FYDP with the fiscal year 1997 FYDP. GAO discusses (1) how major programs were adjusted from the fiscal year 1997 FYDP to the 1998 FYDP and (2) how these adjustments may affect programs in the future. GAO also identifies proposed Quadrennial Defense Review initiatives that could affect future FYDPs.

GAO noted: (1) its comparison of the 4 years common to both DOD's FY 1998 FYDP and FY 1997 FYDP (1998-2001) shows that funding for military personnel, operation and maintenance, and research, development, test, and evaluation is projected to be higher, and funding for procurement is projected to be lower than anticipated 1 year ago; (2) for the fourth straight budget year since 1995, DOD has not met its procurement goals established in pervious FYDPs; (3) the 1998 FYDP retains substantial risk that DOD's program will not be executed as planned; (4) although the 1998 FYDP projects that a smaller percentage of DOD's total budget will be needed to pay for infrastructure activities than that projected in the 1997 FYDP, DOD's projections are questionable; (5) for example, the 1998 FYDP projects billions of dollars in savings due to management initiatives, but DOD does not have details on how all the savings will be achieved; (6) also, DOD projects no real growth in the cost of the Defense Health Program during 1998-2001, whereas this program increased 73 percent in real terms during 1985-96; (7) another reason GAO believes the 1998 FYDP poses risks is that the estimates for procurement spending, in relation to DOD's total budget and its operation and maintenance projections, run counter to DOD's experience over the last 30 years; (8) DOD acknowledged in its May 1997 Report of the QDR that the 1998 FYDP includes substantial financial risk; (9) the Secretary has stated that absent any further changes, the fiscal patterns and assumptions embedded in the 1998 FYDP are most likely not going to free up sufficient funds to achieve DOD's modernization goals; (10) according to DOD, compared to the 1998 FYDP, the QDR proposes a more balanced, modern, and capable defense program that can be achieved within currently proposed budgets; (11) to accomplish its goals, DOD proposes that it reduce personnel, make some modest changes in force structure, realize additional infrastructure saving through fundamental reforms and base realignments and closures, and continue to improve its business operations; (12) the success of these initiatives will require discipline, execution, and aggressive follow-through on the part of DOD management; and (13) on some important initiatives, such as base closures and military personnel reductions, DOD will need congressional approval.